Juan José Echavarría, a former co-director of the Banco de la República's Board of Directors, said the central bank made a mistake by not raising interest rates.
The critique highlights a growing tension between monetary policy and the rising cost of living in Colombia. If the central bank fails to curb inflation, the purchasing power of citizens continues to decline, potentially destabilizing the national economy.
Echavarría said that maintaining the interest rate at 11.5% [1] was a poor choice. He said that the rate should have been increased to slow the pace of inflation, which stood at 5.56% [4] in March 2026.
"Fue una mala decisión. La tasa de interés había que subirla para frenar la inflación," Echavarría said.
There are conflicting reports regarding the bank's recent actions. While some reports suggest the rate was held steady at 11.5% [1], other sources indicate the rate was raised to 11.25% [2] on March 31, 2026. Another report mentions a 100-basis-point increase that brought the rate to 10.25% [3].
Economists generally agree that raising interest rates is a primary tool for controlling inflation. By making borrowing more expensive, the bank can reduce spending and slow price increases. However, this approach often leads to higher costs for consumer loans and mortgages, a trade-off the central bank must manage carefully.
Echavarría's criticism suggests that the current monetary trajectory is insufficient to meet inflation targets. The discrepancy in reported figures reflects the volatility and complexity of the bank's recent policy adjustments during this period of economic instability.
“"Fue una mala decisión. La tasa de interés había que subirla para frenar la inflación."”
The disagreement over the Banco de la República's interest rate policy underscores a critical debate in Colombian macroeconomics. When a central bank is perceived as too hesitant to raise rates despite an inflation rate of 5.56%, it risks allowing prices to spiral, which disproportionately affects low-income populations. The conflicting data on whether the rate was held at 11.5% or adjusted to 11.25% or 10.25% suggests a period of rapid or confusing policy shifts that may impact investor confidence and market stability.
